Singapore’s small businesses riding the AI wave

Koren Wines, Managing Director, Asia for Xero

Singapore has taken another leap forward as a Smart Nation with a pioneering view on artificial intelligence (AI). The government unveiled the National AI Strategy (NAIS 2.0) in December last year, along with a broader pledge of over SGD 1 billion towards AI computing, talent, and industry development in the 2024 federal budget announced in March.

So what’s next? Is additional work required to complement the government’s commitment towards developing an AI-proficient economy? And what else do small businesses in Singapore need to embrace this game changing technology?

Xero’s Future Focus AI survey revealed that while more than two-thirds of the island’s small businesses are open to the benefits of AI, 89 per cent of small business owners are concerned that AI’s development and adoption are outpacing regulation. The study, conducted in August 2023 with input from 3,000 small business owners around the world, surfaced questions around guidance over AI’s use.

With NAIS 2.0, the government plans to take 15 key actions across a range of domains including talent and infrastructure to support its AI ambitions. Among them, there are commitments to ensuring a fit-for-purpose AI regulatory environment, and raising the technology’s security and resilience baseline for users and enterprises in the future.

The NAIS 2.0 and its early initiatives have addressed some concerns from small businesses, which form the core of Singapore’s economy. Opportunities remain for small businesses to shape the future of data regulation and manpower support to better serve their needs.

Understanding AI’s Appeal

AI’s ability to enhance productivity and efficiency is naturally a draw for businesses, particularly SMEs which have leaner teams and fewer resources. AI provides accessible and scalable solutions for small businesses by automating workflows and processes, personalising customer experiences and content, mitigating risk through analytics and so much more.

Singaporean accounting firm Harvest Accounting has seen a significant productivity uplift since adopting AI. Harvest utilises machine learning and optical character recognition to automate data entry through document scanning and auto-categorising based on historical information helping them become more efficient and less prone to manual error, while generative AI improves the company’s interactions with customers by crafting personalised client messages.

Government efforts are underway to help small businesses like Harvest Accounting reap AI’s benefits. The generative AI sandbox, an initiative by the Infocomm Media Development Authority (IMDA) and Enterprise Singapore, provides small businesses with opportunities to experience generative AI solutions across marketing, sales, and customer engagement.

Scaling up initiatives like this is essential, especially considering that small and medium-sized businesses constitute 99% of Singapore’s economy and could potentially form AI’s largest user base. These companies have the potential to offer valuable insights to the public sector on navigating the complexities of AI implementation, particularly for organisations with limited resources.

The Small Business Challenge with AI

Singapore’s government, led by the IMDA, is actively creating a comprehensive framework for AI regulation. The IMDA launched the AI Verify Foundation in collaboration with the tech industry to shape future standards both locally and internationally, along with a discussion paper on AI risks and governance.

The recent release of the Advisory Guidelines on the Use of Personal Data in AI Recommendation and Decision Systems in March 2024 is a significant step towards concrete AI data regulation in Singapore. Developed by IMDA’s Personal Data Protection Commission (PDPC), these guidelines help businesses responsibly use personal data for AI innovation.

These guidelines are especially helpful for SMEs, addressing concerns about securely and ethically handling sensitive data when using AI. The Future Focus study shows that 41% of small businesses struggle with information security in AI adoption. Many have implemented measures like obtaining consent and establishing AI-related data policies.

Small businesses have expressed the need for improved guidance for safe and fair use of personal data in training generative AI. Ethical concerns arise, especially with generative AI potentially perpetuating harmful biases. While existing guidelines touch on these concerns, future regulations could delve deeper. Some companies lack expertise in testing AI datasets for fairness. Singapore’s AI Verify Foundation offers an open-source testing framework, aiding small businesses in ensuring ethical AI practices.

A Thinning Talent Pipeline

Talent scarcity amongst small businesses is a significant challenge for successful AI implementation amongst small businesses. The Singapore government aims to boost the AI talent pool through various training initiatives like postgraduate programs and visiting professorships, allocating SGD 20 million to student-related endeavours like the SG Digital Scholarship.

In Xero’s study, 47 per cent of small companies in Singapore felt that training and resources on different types of AI and their impact are necessary for their business. Another 20 per cent of the survey respondents called for more national AI education and upskilling efforts, which would ensure a larger pool of AI talent.

Shaping Their Support

The AI challenges and opportunities that Singapore’s small business owners face today deliver valuable lessons for businesses of all sizes. Insights from this experience will go a long way in strengthening support for a digital economy that leaves no one behind.

Active participation from SMEs across the island’s vibrant economy will help the government better formulate future AI regulation and  manpower support initiatives. Singapore’s AI regulatory journey has progressed, but is still at an early stage of what promises to be a transformative period.

These next steps, if widely adopted, will help deliver an inclusive future in which small businesses, MNCs, solution providers, and the public sector work together to help AI safely meet the needs of all businesses, regardless of size.

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